Quarterly Recap: The Slow Season

It should come as no surprise to anyone reading this that the IPO market has been rather uninspiring of late. After 2014’s record year, the second half of 2015 saw a market slowdown that left the year as the slowest since 2012.

Unfortunately, that lack of momentum has carried over into 2016, and then some, with the first quarter’s new issuance market practically grinding to a halt.

The IPO market finished March with its 9th week without a debut, leaving the total number of new issuers for the year at a paltry six IPOs totaling $569.6M in proceeds (all six hailed from the healthcare sector, with the largest debut coming from BeiGene, LTD. at $182.2M). Not only was the IPO market significantly down from the previous quarter, (Q4 2015 saw 26 IPOs land for $7.2B), it was also vastly down from 2015’s first quarter, as deal count fell 80.6% from 31 deals while proceeds dropped 89.9% from $5.6B.

How bad is it? Not to bring up old stuff, but the only two years to perform worse in Q1 in terms of IPO activity are 2003 with one, and 2009, which saw just three deals in the aftermath of 2008’s financial collapse.

Check out this graph of how the IPO market has fared in first quarters over the years.

The average Q1 for the years 2001-2015: 27 IPOs for combined proceeds of $8.7B. 2016’s first quarter? Just 6 IPOs for $570M.

Now, for the question we often ask here on the Ipreo Blog: what does the future hold? In the short-term, we’re anticipating the seventh IPO of the year, and the seventh healthcare debut, will land this week – Aeglea BioTherapeutics ($59.5M). And later this month the first non-healthcare IPO should arrive in Bats Global Markets from the Financials sector and which, at $201.6M, would be largest IPO so far this year.

The current six-month pipeline had a sizable year-over-year decline in the number of upcoming deals, and now stands at 41 issuers hoping to raise $6.5 billion in total proceeds. Last year’s comparable backlog reported 59 issuers for combined proceeds of $6.9 billion, without an individual issuer expecting to raise more than $1.0 billion in proceeds.

So it seems as if the downward trend will continue. Let’s just hope this is the last time we have to reference 2008 and 2009.

Ipreo is not registered as a broker or dealer with the U.S. Securities and Exchange Commission (SEC) nor is it a member of a self-regulatory organization such as the Financial Industry Regulatory Authority, Inc. (FINRA) or of the Securities Investor Protection Corporation (SIPC). Outside of the UK, Ipreo does not engage in any activities that will require it to register as a broker or dealer in the jurisdiction in which such services are performed. Ipreo Limited is authorized and regulated by the UK Financial Conduct Authority under reference number 775369 on the Financial Services Register at http://www.fca.org.uk/register/.